Why the New Konga is Different

A commenter on a Konga update wrote: “So based in your previous article about the ‘impossibility’ of ecommerce to thrive beyond Lagos due to absence of proper logistics from Nipost in and outside Lagos, what has now changed, what have they got right? BTW, I smell tongue in cheek”.

You look very refreshed and energized. I just noticed that your style has changed. Wow – nice color. You look really better. And you have got friends with shops across Nigeria. Boy, you are ready to rock. You know what? I like all those pickups. You are now simplifying my life.

You got a great cousin but he said both of you would go with your name. Yudala is really a nice dude. He knew you are more popular in colleges and across major cities in Nigeria. But I also like that you are wearing his clothes even as both share a name. Konga is zen-like. I like it.

Let me apologize if my article came poorly. I am a teacher. We just talk. But I am very happy that you listened when I said you had no more stamina to stand by yourself. Happy you moved in to stay with a cousin. And boy, you look nice.

On that piece, nothing personal sha. I have invested in things that turned out bad. I do not really know a lot but I know how to defend what I know. Let us forget the past. I want to wish you a really good luck as you take the streets of Lagos. People, welcome the new Konga of Lagos

Response:  The New Konga has co-CEOs. One is for the offline (physical) business. The other is for the online business. Simply, the new Konga is now a pure-play hybrid commerce. It has seen that it needs offline component to have a CEO dedicated to physical stores. With Yudala outlets and Zinox branches across Nigeria, the new Konga is your typical supermarket with a top-grade online presence. Meanwhile, this is the referred piece where I suggested that Konga should sell.

Because of Jumia’s ambition, Konga could be attractive. Konga has been severely wounded for any further fight to make sense. I do think the best for Konga is to sell itself now that it can generate higher value. To win in this market, it needs not just revenue but manpower since it is running a logistics business, despite the pivot to subscription classified model. By constantly cutting down manpower, it means it is not taking the fight to the traditional stores like Shoprite and supermarkets. That is weakness that will further erode its capacity to generate more value to shareholders. It can save itself from these challenges by selling to Jumia.

This hybrid model has been at the heart of my point on ecommerce in Nigeria. Without a postal system, the only option is to have physical stores [your partner or you build them]. The new Konga has it. This means it can compete very well with supermarkets even when expanding its business online. This strategy will reduce the marginal cost making it easier to serve more customers. When you do that, your unit economics improves.

The path to profitability will pass through physical commerce. Why compete for 1% when 99% is out there? Amazon and Alibaba know that in 5 years as physical stores move online, their advantages will be neutralized. So, they are playing offense. If the world runs in the physical space. especially in grocery, you better go there to get the deals.

Simply, we need a hybrid commerce strategy in Africa if we want to be on the path to profitability. Marginal cost of ecommerce is dominated by atoms and not (direct) bits. (Sure, information is physical, but let us avoid that complexity here.) Hybrid commerce will require returning to offline partners, and we need to make that work for Africa. It may not be complex if our companies are open to work together and where possible merge.

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